Despite Rocky Market, Few Surprises in January's Fund Flows

January flows appear to have reverted to the general 2015 pattern: outflows from U.S. equity and inflows to international equity.

More interesting are municipal-bond flows, which have been gaining some momentum since October. Inflows to municipal-bond funds have been positive since October and on the rise in the past two months. Taxable-bond funds, on the other hand, have experienced volatile flows, negative for the most part, since June. With the recent interest-rise in the United States and increased uncertainty about where the bond market is heading, it seems investors are betting on the more certain benefits of municipal bonds--safety and tax breaks.

Also, commodities are showing signs of life for the first time. Commodities received a significant influx of money in January, most of it on the passive side, and even more specifically, most of it into SPDR Gold Shares GLD ($1.4 billion). In a notable reversal, this was the first sizable inflow for the precious-metals category in the past six months. Another interesting fact is that, despite plummeting oil prices, the energy category hasn't been experiencing dramatic outflows, as may have been expected. Some investors may be trying to time the bottom.

Other noteworthy trends for the month include:

• In terms of active versus passive, flows were almost evenly distributed for international equity, while U.S. equity and taxable bond continued to experience large outflows on the active side and inflows on the passive side.
• After consistent positive flows in 2014, allocation funds started to experience outflows from some categories in 2015, which then turned into outflows from all categories in the second half of the year. The largest outflows came from world-allocation and conservative-allocation funds.
• The panic in the high-yield market that followed the closure of Third Avenue Focused Credit TFCIX in December has somewhat subsided, but concerns still remain over the sector's resilience in an environment of falling oil prices. Outflows continued in January, but were much smaller than the $11 billion that went out of the category in December.

Access the January fund flows report in its entirety here.